Before closing this round, FabHotels had held talks with MakeMyTrip for a potential investment deal as reported by TOI in its April 25 edition but those discussions have stalled for the time being, people familiar with the matter said.

Founded by Vaibhav Aggarwal and Adarsh Manpuria in 2014, FabHotels is fighting the might of online travel agents (OTAs) like the MakeMyTrip-GoIbibo combine, cash rich new entrants like Paytm along with its peers Oyo Rooms and Treebo Hotels.

Aggarwal told TOI the company is targeting the budget traveller segment as it prices its rooms in the Rs 2,000-2,500 per night bracket and will continue to be run on the franchise model. Distribution channels like MakeMyTrip and Paytm he said were not its competitors as players like FabHotels work with them. In fact, OTAs account for 30-35% of FabHotel's overall bookings.

Having raised $35 million, in all, including its present capital infusion, FabHotels works with about 225 hotels across 20 cities. It strikes agreements with hotel owners and takes over full inventory. Players like FabHotels then put these properties under their own brand and offer them with a standardised service.

“We have been far more capital efficient compared to others thanks to our technology focus. In the next two years we want to become the largest budget brand in the country,” Aggarwal said. The latest funds will be ploughed into expanding the tech team, marketing the brand and sprucing its supply further, Aggarwal said.

The hotel aggregation segment in India has gone through consolidation post a slug of capital came into companies like Oyo and the Tiger Global-backed Zo Rooms, which shut down last year.

OTAs like MMT have been allocating increased investments wanting to make a dent in the hotel aggregating space as margins they draw from airline bookings is half of what they make on hotel bookings. Recently, Treebo Hotels delisted from MMT saying the commission charged by the OTA was too high.